According to the 2024 State of FinOps report by the FinOps Foundation, “Enabling automation” increased in priority for FinOps teams, ahead of “Empowering engineers to take action.” This trend indicates a strategic shift toward leveraging FinOps automation to improve optimization outcomes while minimizing manual effort — or eliminating actions that engineers are usually required to take.
As cloud environments scale and become more complex, organizations face several challenges that manual processes struggle to address effectively. For example, one significant challenge is the sheer volume of cloud usage data that needs to be analyzed and acted upon. Manual processing is time-consuming and prone to errors.
Additionally, the constant changes in cloud pricing require continuous attention, which can overwhelm teams. However, the right FinOps automation tools can streamline the process and improve cloud cost optimization. Read on as we discuss the need for FinOps automation, how it works, and common challenges.
What Is FinOps Automation?
FinOps automation is the use of automated systems and algorithms to help track, understand, and manage FinOps processes for better operational and financial efficiency across various workflows.
There are different types of FinOps automation tools. Some provide real-time visibility into cloud costs through cloud billing data and infrastructure monitoring tools. Others automate usage optimization and cost avoidance, and some focus on cloud rate optimization.
In short, no single tool might serve all the use cases your organization needs. Instead, companies should focus on finding the best fit for each need based on a clear, data-driven understanding of the tool’s cost and value to their organization. Ongoing, periodic reassessments are also useful to ensure the tools continue to match changing needs.
Why Do You Need FinOps Automation?
Cloud services undergo constant revisions and modernization, so even the most well-structured infrastructures need continuous updates and tweaking.
The downside is that this requires detailed knowledge of each cloud offering and time-consuming, tedious work that engineers don’t have the bandwidth for. Engineers have competing priorities, and when they’re burdened with tasks like resource optimization and managing commitment-based discounts, they cannot effectively innovate or build new products. FinOps automation, however, gives engineers more time to focus on meaningful work that drives business.
Here’s how organizations stand to benefit from FinOps automation:
Reducing manual effort
As your FinOps efforts scale, every dollar saved becomes crucial. However, organizations often get caught in the trap of manual tracking and optimization, spending most of their time on tasks that don’t require cognitive decision-making.
This focus on manual processes can lead to missed savings. Automation helps eliminate these repetitive tasks, allowing your FinOps teams to focus on more strategic activities that drive real value.
Time savings
Starting your cloud cost optimization journey can feel like an endless to-do list: constant tracking, ensuring appropriate tagging, resource monitoring, updating outdated resources, shutting down unused ones, understanding complex pricing models, managing commitment plans, and more.
Each task involves handling an overwhelming amount of data that changes every minute or second. Automation steps in here, efficiently managing these tasks and freeing up your team’s time to focus on broader optimization strategies.
Minimizing human error
The more FinOps processes you have, the harder it becomes to maintain the same level of detail and accuracy. You could choose to scale up your human resources to match the workload, but this would significantly increase your operational budget.
Alternatively, you might accept the risk of human errors. FinOps automation offers a third option, executing tasks with precision, minimizing costly mistakes, and allowing your team to maintain high accuracy without added stress.
Scalability
It becomes impossible to do everything manually when you reach a certain scale. You need an automated FinOps approach that enables you to scale up or down as needed, or you lose more money than you save.
Standardizing processes
As organizations grow, maintaining consistent FinOps practices across teams becomes increasingly difficult. Discrepancies in data reporting and processes can lead to confusion and inefficiencies. Automation addresses this by generating standardized, vendor-neutral data reports that can be customized to fit specific needs.
How Does FinOps Automation Work?
FinOps automation tools are designed differently to address various aspects of cloud financial management. While there are many tools and approaches, three major types of FinOps automation stand out: monitoring and visibility, automated usage optimization, and automated rate optimization.
Each type plays a crucial role in managing cloud costs effectively, leveraging different technologies and methodologies to streamline operations. However, it’s essential to understand that what follows is a general overview—these technologies are continually evolving, with new advancements being integrated regularly.
Automated monitoring and visibility
Monitoring and visibility are the foundation of every FinOps practice and automation enables organizations to keep track of their cloud environment in real-time. This capability utilizes APIs and data connectors to collect data from cloud platforms like AWS, Azure, and Google Cloud. The data is then aggregated and normalized into centralized databases, ensuring consistency across different cloud providers. This real-time monitoring helps teams quickly identify and rectify issues, ensuring that cloud resources are used efficiently.
Business Intelligence (BI) tools further enhance visibility by processing and analyzing this data, creating interactive dashboards and automated reports. These reports provide stakeholders with the insights they need to make informed decisions about cloud spend, usage patterns, and cloud governance. Automated reports help with added flexibility as they are configurable to a range of time (a week, 90 days), while APIs provide daily reports. With this data, teams can track daily or weekly spending and strive to stay within budget limits.
Additionally, automation supports cost allocation by ensuring appropriate tagging and facilitating showback and chargeback processes, which are critical for maintaining financial accountability across teams and departments.
In summary, automation in monitoring and visibility empowers organizations to maintain control over their cloud environments and make informed decisions with updated cloud data.
Automated usage optimization
Usage optimization aims to maximize the efficiency and value derived from cloud computing resources.
Automated usage optimization employs ML to analyze historical usage and identify underutilized, rarely used, or unused resources. These insights enable organizations to take action on areas to reduce cloud spend without impacting performance.
The FinOps tools that specify usage optimization also calculate optimal configurations for storage, compute, and memory based on past usage patterns or estimated future needs. They provide customized recommendations for rightsizing resources, shutting down unused resources, scheduling workloads, updating obsolete resources, and more.
Once optimization opportunities are identified, scripts and Infrastructure as Code (IaC) tools can automatically execute these actions. By automating these processes, organizations can significantly reduce waste, lower costs, and ensure that their cloud infrastructure is being used as efficiently as possible, all without overwhelming their engineering teams with manual tasks.
Automated rate optimization
Automated rate optimization aims to reduce the per-unit cost of cloud services by selecting the most cost-effective pricing models. This process utilizes rate comparison engines and predictive analytics to analyze various pricing options across different cloud providers, helping organizations determine the best fit for their specific needs.
By automating the selection and management of these discount instruments, organizations can ensure that they are always getting the best possible rates based on their projected resource consumption.
Additionally, FinOps automation platforms like ProsperOps take this a step further by autonomously managing the purchase, renewal, and optimization of these discount instruments. This ensures that the organization is always aligned with the most favorable discounts without losing performance and requiring constant manual oversight.
Automated rate optimization reduces the time and effort needed to manage complex pricing models, ensures that organizations consistently secure the best rates, and improves overall cloud cost efficiency.
Key Advantages of Using FinOps Automation Platforms
Here are some advantages you can look forward to when you use an advanced FinOps automation platform:
Increased efficiency
FinOps automation streamlines processes like meticulous resource tagging, cost analysis, and setting precise thresholds. These tasks get done faster with minimal human effort and errors, saving time and resources and enhancing overall operational efficiency.
The reduced manual effort means teams can focus on other high-value tasks instead of routine FinOps practices.
Cost optimization
FinOps automation platforms continually monitor and analyze cloud spend to help identify cost-saving opportunities, such as unused resources or leveraging discount instruments. They also help eliminate idle resources and improve usage efficiency. Overall, you’ll save a lot of money without the headache of manual optimization!
Real-time insights
FinOps automation platforms provide real-time, up-to-date data and analytics. This data helps organizations understand their actual costs, enabling more accurate cloud planning.
For example, you can develop detailed budgets and forecasts that help you create accurate financial models and make better decisions about future cloud spending. You can also catch cost anomalies with daily spending and prevent these issues from snowballing into serious problems.
Error reduction
Automation leverages ML/AI algorithms to carry out labor-intensive or tedious tasks, such as analyzing tons of data, purchasing/renewing discount plans and identifying resource optimization opportunities. This not only frees your busy team members from what would otherwise be time-consuming, mind-numbing work but also reduces human error.
The insights automated systems provide are more accurate and free from bias, significantly reducing errors in decision-making.
Scalability
FinOps automation can easily scale to accommodate growing cloud environments and usage. It’s suitable for all organizations, from small, cloud-dependent businesses to large corporations with complex cloud environments involving multiple providers and shared workloads across many teams.
Using FinOps automated platforms ensures that, as your organization grows, you can fully realize potential cloud cost savings.
Expanding automation capabilities
FinOps is one of the fastest-growing disciplines in cloud management. As more organizations move to the cloud, the list of FinOps automation capabilities continues to grow.
Primary FinOps automation capabilities include:
- Real-time cost monitoring
- Automated detection
- Usage optimization recommendations
- Automated tagging and cost allocation
- Rate optimization and discount management
- Policy enforcement and compliance monitoring
- Predictive analytics and forecasting
- Automated resource scheduling
- Multi-cloud cost management
Thus, FinOps automation is continuously solving more and more challenges for organizations, helping them stay ahead in cost savings.
Check out these FinOps Automation best practices, as discussed by a panel of industry experts.
Common Challenges That FinOps Automation Can Solve
Optimizing cloud costs while still ensuring consistent application performance can create several challenges, including:
Understanding complex cloud pricing models
Amazon Web Services (AWS) offers numerous pricing models, including On-Demand pricing, Savings Plans, and Reserved Instances (RIs). On-demand pricing is AWS’s most straightforward pricing model, but discount instruments, like Savings Plans and RIs, can save companies up to 72%.
Similarly, Google Cloud has On-Demand pay-as-you-go pricing, as well as discount instruments like resource-based committed use discounts (CUDs) and spend-based CUDs.
Knowing when and how to use these discount instruments is a challenge. Savings Plans, RIs, and CUDs require you to purchase or commit to cloud resources in advance, which means cost visibility and accurate forecasting are vital precursors.
FinOps automation platforms provide companies with the visibility and predictive analysis they need to understand AWS’s various pricing models and discount instruments.
Managing dynamic cloud environments
The ever-changing demand/complexity of these environments makes it challenging to predict resource needs, which is one of the biggest keys to cloud cost optimization.
FinOps automation tools are better suited for adapting to changing resource needs. These tools are ideal for dynamic cloud environments and can deliver cost transparency and automated optimizations even when resource needs constantly change.
Shifting from reactive to proactive cost management
Cloud cost management is an ongoing process that requires constant monitoring and fine-tuning, so companies relying on reactive cost management are almost always a step behind where they need to be.
FinOps automation platforms shift this approach by enabling proactive cost management. Through continuous monitoring and predictive analytics, these tools automatically optimize costs in real time, ensuring that companies maintain control over their cloud spend without falling behind.
Multi-cloud cost management
Managing cloud costs when working with multiple cloud computing platforms, such as AWS, Google Cloud, and Azure, can be challenging.
For one, tracking costs is difficult. Different providers offer varying price models and understanding all of these with the constant modifications is tedious and extremely time-consuming.
Another complexity is compatibility issues when integrating and migrating different cloud platforms. The different proprietary interfaces and data formats of the platforms can complicate integration and migration, leading to increased costs and operational disruptions due to data loss, corruption, or inconsistencies.
Fortunately, FinOps automation supports multi-cloud management. It enables robust tracking with real-time visibility, analyzes spend patterns, and identifies opportunities for cost reduction across different cloud vendors.
Accelerate FinOps Automation With ProsperOps
There are many cost optimization tools on the market that provide cost-saving recommendations. But without full automation, this latency is still an issue. In other words, if your company has to analyze and implement each recommendation manually, you’ll still fall behind.
Instead of just providing recommendations, ProsperOps takes action, performing optimizations automatically on your behalf to continually deliver savings outcomes. This means you and your team can focus on other responsibilities while ensuring you optimize your workloads for cost efficiency.
In fact, ProsperOps doesn’t even require you to coordinate significant engineering changes with the platform — meaning engineers are free to modify and optimize compute workloads while ProsperOps finds the best rate for that usage.
ProsperOps is the leading FinOps automation platform known for cloud rate optimization. We automatically optimize the hyperscaler’s native discount instruments to reduce your cloud spend and place you in the 98th percentile of FinOps teams.
With ProsperOps, you can continuously maximize discounts on your cloud spend — while limiting your commitment risks.
Sign up for a free demo and see why ProsperOps is a trusted FinOps leader.
